Judge Denies Motion to Reveal Aon Advice Memo

(CN) - A federal magistrate in Chicago refused to force Aon Corporation to produce an internal memo sought as evidence in a class action accusing Aon and its directors of securities fraud.

U.S. Magistrate Judge Morton Denlow determined that the two-page e-mail and attached memorandum, which Aon "clawed back" after production, is protected from disclosure by attorney-client privilege, "the oldest of the privileges for confidential communications known to the common law."

Plaintiff David Roth, representing investors who bought Aon stock, claims Aon and its fiduciaries failed to tell investors about Aon's role in and reliance on contingent commission kickbacks and steering arrangements with insurers.

The memorandum, an expanded draft of the "Compensation for Services" section of Aon's Form 10-K for the Securities Exchange Commission, accompanied an e-mail asking for input from Aon's head of investor relations, deputy general counsel, controller, and an employee in the controller's division.

Deputy General Counsel Richard Barry said he received the e-mail in his role as a legal advisor regarding the draft 10-K and its compliance with federal securities laws.

Roth argued that the e-mail sought business, not legal, advice and thus fell outside attorney-client protection.

The defendants argued that the e-mail's core was a legal issue - Aon's conformity with SEC laws-and the fact that non-lawyers received the e-mail does not destroy the privilege.

Judge Morton agreed.

"To disallow corporations the space to collectively discuss sensitive information with legal counsel would be to ignore the realities of large-scale corporate operation," Morton added.

The magistrate judge allowed Aon to keep its 10-K confidential.

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